Appeal from the Order of the Court of Common Pleas of Chester County, in case of Estate of Michael K. Nichols, Deceased, No. 15-82-1115, and Appeal, No. 803 C.D. 1985, from the Order of the Court of Common Pleas of Delaware County, in case of In Re: Estate of Neal F. Reagan, Deceased, No. 636-84.

These are the consolidated appeals of the Department of Revenue from orders respectively of the Courts of Common Pleas of Chester and Delaware Counties holding that work loss insurance benefits paid to parents of deceased children killed in highway accidents were not to be included in the estates for purposes of taxation under the Inheritance and Estate

[ 97 Pa. Commw. Page 404]

Tax Act of 1961 (Act), Act of June 15, 1961, as amended, P.L. 373, 72 P.S. §§ 2485-101 -- 2485-1201, since repealed and replaced by the Pennsylvania Inheritance and Estate Tax Act, Act of December 13, 1982, P.L. 1086, 72 Pa. C.S. §§ 1701-1796. No-fault benefits were paid to the parents of both decedents in these cases as required by their respective insurance policies. Fifteen thousand dollars in work loss benefits was included in those payments to the parents. The administrators of the estates, who also happen to be the parents of the decedents, did not include the work loss benefits as taxable assets in their respective inheritance tax returns. The Department of Revenue took the position that they were includable as taxable assets. The common pleas courts excluded them.

The Department of Revenue claims that a work loss benefit received under the now repealed Pennsylvania No-Fault Motor Vehicle Insurance Act (No-Fault Act), Act of July 19, 1974, P.L. 489 (No-Fault Act), 40 P.S. §§ 1009.101-701, is subject to Pennsylvania inheritance taxes pursuant to the Act. The Department of Revenue claims that the personal representative of the deceased victim's estate is the proper party to bring suit to recover the work loss benefit and thus, since the work loss is a chose of action of the decedent or his personal representative, the benefits are assets of the estate and subject to inheritance transfer taxes under Section 211 of the Act.*fn1

Section 201 of the No-Fault Act provided that in the event of an automobile accident, "any victim or any

[ 97 Pa. Commw. Page 405]

survivor of a deceased victim is entitled to receive basic loss benefits in accordance with the provisions of this act." Section 202 of the No-Fault Act defined "basic loss benefits" as including work loss and survivor's losses. Section 103 of the No-Fault Act defined "survivor" as a spouse or child, parent, brother, sister or relative dependent upon the deceased for support. The parents of the deceased victims, if dependents, are clearly survivors entitled to receive basic loss benefits, including work loss benefits, under Section 201 of the No-Fault Act.

In Heffner v. Allstate Insurance Co., 265 Pa. Superior Ct. 181, 401 A.2d 1160 (1979), aff'd, 491 Pa. 447, 421 A.2d 629 (1980), the widow of a man killed in an automobile accident claimed entitlement to survivor's loss and work loss benefits under the No-Fault Act. The court held that the widow was entitled not only to ...

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